Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Current Attempt in Progress Windmere Corporation's statement of financial position at December 31, 2020, appears as follows: Cash $62,000 Other current assets 1,104,000 Capital assets

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed Current Attempt in Progress Windmere Corporation's statement of financial position at December 31, 2020, appears as follows: Cash $62,000 Other current assets 1,104,000 Capital assets (net) 7,074,000 Total $8,240,000 Current liabilities $544,000 Long-term debt 1,410,000 Preferred shares 710,000 Share capital-common shares 2,130,000 Retained earnings 3,446,000 Total $8,240,000 For the year just ended, Windmere reported net income of $576,800. During the year, the company declared preferred dividends of $108,416 and common dividends of $254,968. Calculate, using year-end amounts for assets and shareholders' equity, the following ratios for Windmere: (Round answers to 1 decimal place, eg. 15.2%): L Return on assets, using net income in the calculation Return on assets ii. Dividend payout ratio Dividend payout ratio % iii. Return on common shareholders' equity Return on common shareholders' equity Assume that the company issued $1,410,000 of common shares at the beginning of 2020 and paid off the long-term debt. By repaying the long-term debt and not incurring any interest expense, the company's net income increased by $62,000. 1. What would the return on common shareholders' equity be? (Hint: Remember that shareholders' equity is affected by net income.) (Round answer to 1 decimal place, eg. 15.2%) Return on common shareholders' equity % Assume that the long-term debt remains as shown on the statement of financial position and that the company issued an additional $710,000 of common shares at the beginning of 2020. The company used the proceeds to redeem and cancel the preferred shares. i. What would the return on common shareholders' equity be? (Round answer to 1 decimal place, eg. 15.5%) Return on common shareholders' equity %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Survey of Accounting

Authors: Carl S. Warren

8th edition

1305961889, 978-1337517386, 1337517380, 978-1305961883

More Books

Students also viewed these Accounting questions